Currency ban transactional loss to be Rs 1.28 lakh cr

Government’s scrapping high value Rs 1000/500 notes has “hit the poor man” hard and the economy may suffer a transactional value loss of Rs 1.28 lakh crore till December 30, West Bengal Finance Minister Amit Mitra said today.

“My concern is the double whammy of the common poor people. It has hit the common man hard. It has been a massive destabilisation resulting in transactional cost (loss) of Rs 1.28 lakh crore in 50 days. It is a complete de-empowerment of the small and medium and even large enterprises,” Mitra said at a conference here.

People have time till December 30 to deposit the scrapped currency.

West Bengal government led by Trinamool Congress, under Chief Minister Mamata Banerjee, has supported the proposed Goods and Services Tax (GST) bill from very beginning, he said, adding however that this demonetisation disruption in the middle of preparation towards GST will impact the economy severely.

“We all agree that for GST to come, the state taxes’ are going to be down in the initial two to three years. That is why GST promises to compensate the states and the percentage has been given as 14 per cent. So when you couple this destabilisation with GST, it will bring down state taxes even more,” Mitra said.

This destabilisation of the fiscal architecture of the country will completely disrupt the transaction mechanism of the country in terms of trade, goods and services, in terms of manufacturing (input and output), he added.

He said sectors like powerloom, leather and tannries, yarn production, cotton spinning, agriculture, tractor sales, consumer durable sales, cement dispatches, secondary steel industry, exports are all getting severely affected as Rs 500 and Rs 1,000 notes have been barred from circulation and has also resulted in massive job loss in the unorganised sector.

Further, countries like the former Soviet Union, Zaire, Myanmar, Ghana and Nigeria had brought such moves in the past past but the action were unsuccessful in all the places, he said.

The West Bengal Finance Minister also emphasised that the state is mainly an agricultural dependent and its economy will be jeopardised after this decision of the Government.